Front Matter Page
© 2003 International Monetary Fund
November 2003
IMF Country Report No, 03/352
Italy: Selected Issues
This Selected Issues paper for Italy was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on October 23, 2003. The views expressed in this document are those of the staff team and do not necessarily reflect the views of the government of Italy or the Executive Board of the IMF.
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Front Matter Page
INTERNATIONAL MONETARY FUND
ITALY
Selected Issues
Prepared by Christopher Kent, Athanasios Vamvakidis, and Luisa Zanforlin (all EUI)
Approved by the European I Department
October 23, 2003
Contents
I. Introduction
II. Inflation and Competitiveness
A. Introduction
B. Determinants of Inflation Differentials: Persistent and Temporary Factors
C. Model Estimates—Price Level Convergence Versus Inflationary Expectations
Panel regression model
Results
D. Productivity and the Output Gap
Productivity
The role of the output gap
E. Conclusions
Tables
1. Summary Statistics for Euro-Area Countries
2. Panel Regressions: Determinants of Euro-Area Inflation Differentials
3. Panel Regressions: Determinants of Euro-Area HICP Inflation Differentials
4. Estimated Contributions to the Consumer Price Inflation Differential, Euro-Area Countries, 2002
5. Panel Regressions: Determinants of Euro-Area HICP Inflation Differentials
6. Estimated Contributions to the Consumer Price Inflation Differential, 2002
Figures
1. Inflation Differential Versus the Euro Area, 1991–2003
2. Export Market Share, 1989–2003
3. Export Market Share Relative to Germany and France, 1989–2003
4. Initial Price Level Versus Average Inflation
5. Initial Productivity Versus Average Inflation
6 Inflation of 1980s Versus Current Average Inflation
7 Inflation Versus Average Output Gap
8. Output Gap, 1997–2002
Appendix: Data
References
III. Regional Convergence in Italy: 1960–2002
A. Introduction
B. Regional Economic Disparities in Italy
C. Policy Initiatives to Reduce Regional Economic Disparities in Italy
Early policy initiatives
Recent policies
D. Convergence in Italian Regions
E. What is Driving Convergence in Italian Regions: TPF Growth Versus Factor Accumulation
F. The Determinants of Growth in Italian Regions
G. Conclusions
Tables
1. EU: Regional Coefficients of Variation of Selected Indicators of Economic Performance, 1995–2001
2. Selected Regional Economic Indicators, 1987–2002
3. Convergence of Regional GDP per Capita in Italy, 1960–2001
4. Convergence of Regional GDP per Employee in Italy, 1960–2001
5. Convergence of GDP per Capita and GDP per Employee in EU Regions Compared with Convergence in Italian Regions, 1977-2000
6. Production Function Estimates for Italian Regions (Growth Contributions), 1997–2000
7. The Determinants of GDP per Capita Growth in Italian Regions, Pooled Panel with Time Effects
8. The determinants of GDP per Capita Growth in Italian Regions, Pooled and Cross-Region Estimates Using Five-Year Averages, 1960-2000
Figures
1-6
7-12
13-18
19-24
Text Box: Performance indicators of the New Regional Development Policy in Italy
Appendix: Data
References
IV. Pension Reform Issues
A. Introduction
B. Pensions and Social Protection Expenditures in Italy
C. The Current Pension System: Past Reforms and Policy Challenges
The public scheme
The pre-reform system
The reforms of the 1990s
The current mixed system and the transition to the defined Contribution system
The private pension system
D. Trends in Current Pension Expenditures: New Policy Challenges
Demographic scenario
Macroeconomic scenario
Trends in pension expenditures across Europe
Vulnerabilities of the projected pension expenditures
Fiscal sustainability issues
E. Issues Underling Further Reforms
Direction of reform
Current government proposals
Expenditure paths under different reform scenarios
Comparing scenarios
F. Conclusions
Tables
1. Selected European Countries: Old Age and Survivor Benefits
2. Pensions and Social Protection Expenditure–Italy vis-à -vis Other European Countries, 2000
3. Pension Contribution Rates in Selected OECD Countries, 1967–97
4. Expected Old-Age Replacement Rates in Selected OECD Countries, 1961–95
5. Selected European Countries: Average Retirement Age
6. Average Effective Retirement Age, 1994–2001
7. Summary of the Main Features of the Current Italian Pension System, 2000–2030
8. Pension Expenditure Projections Across Selected European Countries
9. Savings with Different Regulatory Changes, 2005–2050
Figures
1. Macroeconomic Projections, 1995–2050
2. Projected Pension Expenditures to GDP, 2005–2050
3. Pension Expenditures as a Share of GDP, 2005–2050
4. Public Debt Dynamics, 2000–2050
5. Lower Female Participation Rates, 2005–2050
6. Increasing Retirement Age for Old0-Age Pensions, 2005–2050
7. Women’s Retirement Age for Old-Age Pension Increased to 65, 2005–2050
8. Minimum Retirement Age for Seniority Pensions Increased to 62, 2005–2050
9. Lower Female Participation Rates, 2005–2050
10. Increasing Retirement Age for Old-Age Pensions, 2005–2050
11. Women’s Retirement Age for Old-Age Pension Increased to 65, 2005–2050
12. Minimum Retirement Age for Seniority Pensions Increased to 62, 2005–2050
References